DONACO INTERNATIONAL LIMITED 2018 ANNUAL REPORT 58 59 DONACO INTERNATIONAL LIMITED 2018 ANNUAL REPORT 59 58 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2018 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2018 NOTE 16. NON-CURRENT ASSETS – OTHER CONSOLIDATED 2018 2017 $ $ Other debtors 4,018 3,895 NOTE 17. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES CONSOLIDATED 2018 2017 Trade payables (note 28) 4,842,651 4,472,103 Deposits received 97,285 101,974 Floating chips (note 28) 6,624,856 13,013,770 Interest payable 646,922 2,060,154 Other payables and accrued expenses 22,440,301 22,140,106 34,652,015 41,788,107 Refer to note 28 for further information on financial instruments. FLOATING CHIPS The number of floating chips is determined as the difference between the number of chips in use and the actual chips counted by the casino as at reporting date. NOTE 18. CURRENT LIABILITIES – BORROWINGS CONSOLIDATED 2018 2017 $ $ Joint Stock Commercial Ocean Bank 2,882,374 2,791,979 Mega International Commercial Bank Co Ltd 21,712,541 52,116,619 24,594,915 54,908,598 Refer to note 28 for further information on financial instruments. Total secured liabilities The total secured current liabilities are as follows: Joint Stock Commercial Ocean Bank 2,882,374 2,791,979 Mega International Commercial Bank Co Ltd 21,712,541 52,116,619 24,594,915 54,908,598 DNA STAR VEGAS – CASINO LICENCE The casino licence relates to the licence to operate the DNA Star Vegas casino acquired on 1 July 2015. The licence is stated at cost less any impairment losses. This intangible asset is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of the cash generating unit of DNA Star Vegas has been determined based on the fair value less costs of disposal. An independent valuation of the 100% equity interest in DNA Star Vegas Company Limited was undertaken as at 31 December 2017. Adjustments were made to determine the fair value less cost of disposal of the cash generating unit which was reasonably determined to be $330,204,466 (US$257,550,000 converted at the spot rate). This amounts to $348,465,150 at the 30 June 2018 spot rate. The valuation was determined using budgeted gross margin based on past performance and its expectations for the future and are considered to be reasonably achievable. The valuation is classified as level 3 fair values in the fair value hierarchy as it was based on a five-year cash flow forecast period. The weighted average growth rates used are consistent with forecasts included in industry reports. The valuation uses a growth rate of 11% in the first year, 3% in the following four years and a terminal growth rate of 3%. The discount rates used of 15.06% reflect specific risks relating to the relevant segments and the countries in which they operate. The valuation was determined using a foreign exchange rate between Thai baht and US dollar of THB32.574: US$1. A capital expenditure percentage of 2.52% has also been included in the valuation. Furthermore, the valuation includes a Discount for Lack of Marketability (‘DLOM’) of 20.4%. Apart from the impairment loss, the movement in the historical cost of the casino license is due to foreign exchange translation as the licence is denominated in foreign currency. LAND RIGHT Intangible asset of $31,187 (2017: $32,353) which relates to a 30-year land use right in the Socialist Republic of Vietnam. Land use right is stated at cost less accumulated amortisation and any impairment losses. The amortisation period is 30 years. This intangible asset is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. NOTE 15. NON-CURRENT ASSETS – CONSTRUCTION IN PROGRESS CONSOLIDATED 2018 2017 $ $ Property construction works in progress – at cost 591,787 595,885 RECONCILIATIONS Reconciliations of the written down values at the beginning and end of the current and previous financial year are shown below. CONSTRUCTION WIP Consolidated $ Balance at 1 July 2016 1,143,158 Additions 1,612,657 Exchange differences (82,832) Transfer in/(out) (2,077,098) Balance at 30 June 2017 595,885 Additions 270,209 Disposals (261,366) Exchange differences 23,912 Transfers out (36,853) Balance at 30 June 2018 591,787 Construction relates to costs incurred for the new construction of the Aristo Casino. Amounts previously recognised as prepaid construction costs are transferred to construction in progress, once associated works have been completed. Once recognised as part of construction in progress the amounts are then carried on the statement of financial position at cost, until such time as the asset is completed and ready for its intended use. Work in progress is not depreciated, but tested for impairment annually. Once ready for its intended use an amount equal to the cost of the completed asset will be transferred to property plant and equipment or non current prepayment and accounted for in accordance with the consolidated entity’s accounting policy for each asset class.